For the most part, the United States does very well on these measures. You can’t finish 12th out of 178 countries if you don’t have a large degree of economic freedom. Property rights are guaranteed (though they declined by five points last year). Our court system is independent. The average tariff rate is commendably low (1.3 percent). Business start-up procedures are relatively efficient. The labor market is flexible.
But the United States is still lagging. “Substantial expansion in the size and scope of government, including through new and costly regulations in areas like finance and health care, has contributed significantly to the erosion of U.S. economic freedom,” the Index editors write.
Incorporating a business takes an average of five days, but the cost of our regulatory requirements has risen by more than $60 billion since 2009. More than 130 new regulations have been imposed. Government subsidies are on the increase.
The news is no better when it comes to taxes. The top corporate rate remains at 35 percent, and the top individual income tax rate is 39.6 percent. The overall tax burden has risen to 25.1 percent of total domestic income, meaning that government confiscates $1 out of every $4 earned.
Total government spending is another weak spot for the U.S. It amounts to more than 40 percent of gross domestic product (GDP), or what we produce in a year. That’s much too high.
“The U.S. is the only country to have recorded a loss of economic freedom in each of the past seven years,” the editors write. Will we pressure our elected officials to take bold and serious steps to reverse that trend? Or make it eight straight years next time?